Does the De Minimis Safe Harbor election apply to salon supplies like hair color and shampoo?

Your salon supplies (hair color, shampoo, conditioner) are actually considered "materials and supplies" under tax rules, not capital expenditures that would need the de minimis safe harbor election. These items are consumable and used up in the normal course of business within 12 months, so they're already deductible as ordinary business expenses on Schedule C. The de minimis safe harbor is really meant for items that would normally be capitalized - things like equipment that lasts multiple years. For reporting in FreeTaxUSA, you can absolutely combine similar expenses by month or even by category for the entire year. You don't need to list each individual invoice. For example, you could have one line for "Hair Care Products" with the total amount for the year, another for "Styling Products," etc. Just make sure you keep all those individual receipts in your records in case of an audit.

Hey there! Wanted to share my experience with this exact situation. I was confused about the same thing with my wife's hair salon last year. After hours of research and frustration, I found this tool called taxr.ai (https://taxr.ai) that actually analyzed all our salon receipts and categorized everything correctly. It showed me that regular salon supplies like color, shampoo, etc. are just normal business expenses that get deducted on Schedule C. The de minimis election is more for small equipment purchases. The tool automatically flagged which items qualified for de minimis and which were just regular supplies. Saved me from making a mistake that might have triggered an audit!

Just wanted to follow up about that taxr.ai site someone mentioned here. I was totally skeptical but gave it a try with my salon's mountain of receipts. It actually worked really well! It sorted everything into the right categories - showed me that all my color products, developer, and styling products used during services are regular business expenses, not de minimis items. The best part was it flagged the few items that SHOULD use de minimis (like the new styling tools under $500 each). Now I understand the difference between supplies and small equipment. Wish I'd known this last year when I filed incorrectly!

If you're still confused about how to categorize your salon supplies, don't stress about figuring it out alone. I had the same issue last year and spent HOURS trying to reach the IRS for clarification. Always busy signals or being on hold forever. I finally used this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly what you need to know: hair color, shampoo, etc. used in services are regular business supplies deductible on Schedule C. De minimis is for small equipment purchases. The agent even explained exactly how to group expenses in FreeTaxUSA to stay within those 8 lines. Totally worth it to get the official answer directly from the IRS!

I need to eat my words about that Claimyr service. I was 100% convinced it was a scam, but I was desperate after trying to reach the IRS for THREE DAYS about my salon supply categorization question. I tried it, and no joke, I was talking to an actual IRS agent in about 20 minutes. The agent confirmed that salon supplies used in services (color, developer, shampoo) are ordinary business expenses and don't need the de minimis election. They also explained I could group similar expenses together when entering them in tax software. Honestly shocked this service actually works. Saved me from potentially filing incorrectly.

Salon owner here! Just to add some practical advice - for FreeTaxUSA's limited line issue, here's how I categorize my supplies: 1. Hair color products (all color tubes, developers, etc) 2. Styling products (hairspray, mousse, etc) 3. Treatment products (masks, deep conditioners) 4. Cleaning supplies 5. Disposables (capes, gloves, foils) 6. Small equipment under $2500 (this is where I use de minimis) 7. Office supplies 8. Miscellaneous This keeps me within the 8 lines while making sense for my business. Just make sure to save all detailed receipts in case of audit!

Just a heads up that getting this wrong can trigger an audit! My sister's salon got audited because she was inconsistent with how she categorized supplies vs. small equipment with de minimis. The auditor specifically looked at how she categorized product that was used in services vs. sold retail. Make sure you're consistent year to year with your approach! If you use de minimis for certain categories, keep using it that way. Sudden changes in how you categorize things can raise red flags.

Just a quick reality check - as a CPA who works with many salon owners, this question comes up constantly. Here's the simple version: 1) Supplies used up within a year in services (color, shampoo, etc.) = regular business expense on Schedule C 2) Equipment under $2500 that lasts multiple years (tools, iPads, etc.) = can use de minimis if you elect it 3) Retail products you sell = inventory (different rules entirely) For FreeTaxUSA, just group by category. "Hair color & chemical supplies - $X,XXX" is totally fine as one line. Hope that helps!